Social Security Survivors Benefits What you need to know

not long ago the Social Security Administration was called under paying nearly 10,000 individuals the survivor benefits they were rightly entitled to receive this amounted to over a hundred and thirty million dollars in benefits how could this happen well the report placed the blame squarely on the shoulders of the Social Security Administration but the truth is it happened because the individuals who are receiving these benefits didn't fully understand how to calculate them and know what they were even supposed to be receiving so in today's video I want to give you a crash course on Social Security survivor benefits so the same thing won't happen to you let's dive in [Music] so we're about to take a deep dive into Social Security survivor benefits but before I fill up your mind with all of that information I want to remind you of a couple of things number one if you want to see more videos on Social Security and then just retirement planning topics in general subscribe to my channel and be sure to hit the notification bell that way every time I produce a new video you'll see it pop up in a notification second download the blueprint guide to my best-selling Amazon book social security basics this guy that you'll download is the distilled version of that book and really the best part is it's free it covers all of the social security basics including the one we're talking about today there's a link in the description so be sure to check that out you know social security survivors benefits might be the one thing about Social Security that I can give a simple answer to it goes like this at the death of the first spouse surviving spouses are entitled to receive the higher of their own monthly benefit or the monthly benefit of the deceased now that's the clean and straightforward answer but of course it's not quite that simple in real life so I want to go into the nuances of how the benefit is calculated but first before we get there we need to know who is entitled to receive these benefits there are three types of individuals who are eligible to receive these benefits one surviving spouses two farmer spouses and three children of the deceased person so for the purposes of this video I want to concentrate on the benefits that surviving and former spouses are entitled to but no conversation about survivor benefits would be complete without at least mentioning the benefits available to children when I check the guide for 2018 children receive somewhere around 30% of all survivor benefits so an eligible child is one who is unmarried younger than 18 or up to 19 if they're still in school or any age if they have a disability that began before they turn 22 so then now let's look at the eligibility criteria for spouses which is where I want to spend the remainder of this video first let's look at surviving spouses in order to qualify for a survivors benefit a surviving spouse must have been married for at least nine months now there are multiple exceptions to that nine-month role and I'm gonna put a link in the comments below that has some more information on those exceptions now these benefits can begin as early as age 60 as opposed to 62 for normal retirement benefits and if you're disabled those benefits can begin as early as age 50 now one of the important caveats to these rules is if you're caring for a child at a deceased spouse and that child is less than 16 or disabled in that scenario there is no minimum age at which you can start to receive survivor benefits the criteria for former spouses is slightly different to receive survivor benefits from a former spouse you must be at least 60 and have been married to them for at least 10 years before your divorce occurred one exception to this 10-year requirement is again if you're caring for the ex-spouses child who is either less than 8 16 or disabled now you must also be currently unmarried unless you get remarried after the age of 60 or 50 if you're disabled in that case you can still get a survivor benefit from a prior spouse so now that we know who is eligible to receive a survivor benefit let's move on to how it's calculated this is the fun part as I said at the beginning of this video there's a simple way to explain Social Security survivor benefits and it's simply that at the death of the first spouse surviving spouses receive the greater of their own benefit or the benefit of the deceased but that simple of explanation just doesn't consider the three factors that can impact the benefit amount number one did the deceased file for benefits before they died number two at what age did the deceased file for benefits and number three at what age will the surviving spouse file for benefits now that third factor is going to play an important part in the overall calculation but before we get into that let's look at how things change based on whether or not the deceased filed for benefits before they died so first let's look at if the deceased spouse did not file for benefits so if the deceased spouse never filed for benefits but died on or before their full retirement age the calculation is relatively easy the survivor receives the deceased spouse is full retirement age benefit adjusted for the survivors filing age and again I'll get to those adjustments a little later on they will play a pretty important role if the deceased spouse never filed for benefits and died after therefore retirement age the survivor receives the deceased benefit in the same amount as if the deceased would have filed on the day of death and this does include any delayed retirement credits but it is all again reduced for the filing age of the survivor but what if the deceased spouse filed for benefits before he or she passed away if this is the case it gets a little more confusing so first if the deceased spouse filed for benefits on or after their full retirement age and the surviving spouse is at full retirement age the benefit amount payable to the surviving spouse will remain unchanged but if the surviving spouse is less than full retirement age the amount the deceased spouse was receiving would be reduced by the falling age of these survivor here's where it gets tricky if the deceased filed for benefits before their full retirement age the surviving spouse is entitled to the full retirement age benefit of the deceased again that's reduced for survivors filing age but it will always be limited to the larger the actual benefit of the deceased or eighty two and a half percent of the deceased full retirement age benefit this eighty two and a half percent limit it's a special role it's often called the widow's limit the technical name is the retirement insurance benefit national limitation which the Social Security Administration generally refers to as the RHIB limb now it's meant to offer some protection for surviving spouses when the deceased spouse filed at or near the earliest date possible so I want to slow down here and really cover this widow's limit this is tripped up many surviving spouses and cause them to delay their benefits longer and sometimes years longer than they should have but to fully understand how this works you have to understand how the benefits change based on the age of the survivor and this goes back to that third factor in the calculation that we talked about earlier assuming your full retirement age is 67 your survivor benefit will be reduced if you file for benefits early so let's start at the top of the chart if you're disabled you can file for benefits as early as age 50 if you are not disabled you can file at age 60 but in both cases you receive a benefit reduction for filing early and you would only receive about seventy one and a half percent of the benefit you would receive at age 67 looking at the chart you'll see how the percentage of benefit increases as you get closer to full retirement age however there is one case where a good part of this chart becomes completely irrelevant that is if you to see spouse follow four benefits at or near the earliest age possible in that case you will be forever limited to eighty two and a half percent of their full retirement age benefit amount even if you delay to your full retirement age if you look at the chart you'll see that you would be at that percentage of benefits somewhere in between 62 and 63 this means that even if you keep waiting your survivor benefits will not increase so it may make sense for you to file as early and as quickly as you hit that eighty two and a half percent count now since the full retirement age has been changing the point where you hit that cap is dependent on your year of birth but it's somewhere in between 62 and four months and 62 and seven months old you may want to hit the pause button right here and find your own year of birth if this is your situation now that we've covered the calculation of the survivors benefit blacks spend some time covering one of the last remaining advance filing strategies that are still available this is the strategy that the office of the Inspector General was referencing when they chastised the Social Security ministration in their 2018 report so if you have both a benefit from work you did and may survivors benefit it could make sense to file for one and later switch to another for example you could file for a survivor benefit as early as age 60 and switch to your own benefit as early as age 70 and which point it should have grown and would be considerably larger let's use an example here of Paula so at Paula's full retirement age she has a benefit of $1,500 from her own work and a survivor's benefit of $1,600 and let's just assume that her full retirement ages age 67 so using the advance filing strategy that we just discussed she could file for the survivors benefit at 860 now there would be a reduction due to her age so she would start receiving around eleven hundred and forty four dollars per month at age 70 she could simply switch back to her own benefit which would have grown to eighteen hundred and sixty dollars over her lifetime that filing strategy could make a big difference in her total income there's one last thing that we have to talk about if you're thinking about filing for survivors benefits or any benefit before full retirement age you have to keep in mind that the Social Security Administration imposes a limit on the amount of income you can earn from work now this limit changes every year but for 2018 at seventeen thousand and forty dollars the one exception is the year you attain full retirement age and in that year you can earn up to forty five thousand and some change but once you hit full retirement age there is no limit on the amount of earnings that you can have you know I know we've covered a lot of material in this video don't hesitate to go back and re-watch any of the parts that you need clarification on you can also find a lot of this information on my website at Social Security Intelligence comm or in the free blueprint guide to my book that I mentioned at the beginning of this video also please subscribe to this channel if you want to see more videos like this and most importantly have a fantastic week thanks for watching you